Annual Compliance
Income Tax
Income Tax Return is the form in which assessee files information about his/her Income and tax thereon to Income Tax Department. Various forms are ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.
Who needs to file an income tax returns?
Individuals who fulfil any one of the following conditions should by law file their Income tax Returns during a financial year:
People whose gross total income (before any deductions exceeds ₹2.5 lakh in FY or ₹3 lakh for senior citizens or ₹5 lakh for super senior citizens).
Companies or firms irrespective of whether you have income or loss during the financial year.
Those who want to claim an income tax refund.
Those who want to carry forward a loss under a head of income.
Resident individuals who have an asset or financial interest in an entity located outside of India. (Not applicable to NRIs or RNORs).
Residents and signing authorities in a foreign account. (Not applicable to NRIs or RNORs).
Those who derive income from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
Foreign companies taking treaty benefit on a transaction in India.
NRIs, who have income that exceeds ₹2.5 lakh in FY which is earned or accrued in India, are required to file an income tax return in India.
Advance Tax
Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department.
Who should pay Advance Tax?
Salaried, freelancers and businesses- If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
Presumptive income for Businesses–The taxpayers who have opted for presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15 March. They also have an option to pay all of their tax dues by 31 March.
Presumptive income for Professionals– Independent professionals such as doctors, lawyers, architects etc. come under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability in one instalment on or before 15 March. They can also pay the entire amount by 31 March.
Self Assessment Tax
Self-assessment tax refers to any balance tax that has to be paid by an assessee on his assessed income after the TDS and advance tax have been taken into account before filing the return of income. The IT return cannot be submitted to the IT Department till the time the taxes have been paid. At the end of the year, if there is any tax that is pending before filing the ITR, there is a final amount that has to be calculated.
Why Should Self-Assessment Tax be Paid?
Self-Assessment Tax is a tax that is paid by an individual in relation to the income from other sources. If the taxpayer misses out on some income while making the final payment, TDS might not have been deducted or might have been done at a lower rate. While there is no exact date of payment, the tax is always paid for the end of a particular year. Paying it as soon as possible helps in avoiding the interest on the tax amount. Since this tax has to be paid before the ITR are filed, it has to be done in the same assessment year.